U.S. farmers are growing peanuts faster than the nation, or the world, can consume them, say USDA economists, who estimate the peanut supply will be a record 9.5 billion pounds following this year’s harvest. Thanks to rising demand, led by China and Vietnam, exports are forecast for a record 1.5 billion pounds — one-fourth of this year’s crop — but the U.S. peanut surplus could continue to grow.
Production has skyrocketed since 2014, with growers harvesting the second-largest crop in 2015 and headed for the third-largest, 6.1 billion pounds, this year, says the monthly Oil Crops Outlook. Some 3.4 billion pounds of peanuts, more than a six-month supply, are expected to be in U.S. warehouses when the 2017 crop is ready for harvest. The so-called carryover would be 1.3 billion pounds larger than it was in 2015.
The boom in peanut production coincided with enactment of the 2014 farm law, which set the reference price — a trigger for subsidies — close to the long-term market price. With commodity prices in a slump across the board, especially for cotton, peanuts suddenly were an attractive crop to grow because of the federal subsidy.